Gratuity
SRIPATI KUMAR SWAIN
(Querist) 31 March 2013
This query is : Resolved
Dear Seniors,
If an employer asks an employee to resign before completing 5 yrs due to downsigning of work force, will that employee can claim Gratuity as employer has asked him to go for their compulsions. Actually most of the employees have completed 4 yrs. Pl advice.
Regards
Sripati
Advocate M.Bhadra
(Expert) 31 March 2013
Please tell us how many years/months/days the said employees has render his service,read the following information from www.chrmglobal.com:-----
By virtue of the judgment of Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal,[(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months and it is not necessary that he should have completed one whole year’s service. As the definition of continuous service in Industrial Dispute Act and Payment of Gratuity Act are synonymous, the same principal can be adopted under the act also and hence an employee rendering service of 4 year 10months 11days is considered to have completed 5 years continuous service under sec.4(2) and thereby is eligible for gratuity."
Kumar Doab
(Expert) 31 March 2013
Mr. Bhadra has given valuable advice. Kindly follow it.
The employer is asking to tender resignation to avoid lay off/retrenchment compensation not only the payment of Gratuity?
The question arises why should employee oblige?
The forced resignation may be claimed as deemed termination……
---
Payment of Gratuity Act, 1972
Section: 2A
Continuous service.
(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of………………….. lay off, strike or a lock-out or cessation of work not due to any fault of the employee……………..
The period above 6 months is treated as 1 year………..
The Judgment Passed by Madras High Court in case of Mettur Beardsell Ltd has categorically specified that 240 days service in a year amounts to complete 1 year of service.
Payment of Gratuity Act, 1972
Section: 2A
Continuous service.
The Section 2 (a) (i) -----190 days = 1 year if company operates 5days/week.
Section 2 (a) (ii)-------240 days= 1 year in any other case (if company operates 6 days/week).
Section 2 (b) (i) (ii) and Explanation (i) may also be looked into.
---Has the company informed the Controlling Authority of the area for the intended closure of the business?
THE PAYMENT OF GRATUITY (CENTRAL)
RULES, 19721
3. Notice of opening, change or closure of the establishment.-
(3) Where an employer intends to close down the business he shall submit a notice in Form C to the controlling authority of the area at least sixty days before the intended closure.
The employee in question should guard his interest.
SRIPATI KUMAR SWAIN
(Querist) 01 April 2013
Dear Seniors,
Thanks for the prompt reply. Actually most of the employees have completed 4 yrs.
Regards
Sripati
Adv k . mahesh
(Expert) 03 April 2013
yes previously it was 5 years no after supreme court enhanced it to 4 years 10 months
prabhakar singh
(Expert) 03 April 2013
agree with answers advanced as it is now 4 years and 10 months.
Adv k . mahesh
(Expert) 03 April 2013
if you are a software engineer or employed in other high-paced jobs, you
would probably give the above answer. Most people think it is 5 CALENDAR
years ( or 365 * 5 days exact)
But the correct answer is:
4 years 8 months
(or 240 days to be precise for organizations working 6 days a week)
or
4 years 190 days
(in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week )
Most software engineers (or professionals employed in other high-paced jobs) have
very limited knowledge of Gratuity laws – the reason is simple – very few professionals actually stay for around 5 years in the same job
but if you have managed to stay long in the same company, and more importantly been on the edge of 5 years of service
SRIPATI KUMAR SWAIN
(Querist) 03 April 2013
Dear Seniors, This issue is not yet resolved. My query is if an employee has completed 4 yrs and employers asking to go due to downsizing can employer compensate him for the gratuity legally.
Regards
Sripati
prabhakar singh
(Expert) 03 April 2013
In such a situation employee can not legally demand any gratuity.
Kumar Doab
(Expert) 03 April 2013
The question arises how the employer is asking the employees to go: “by extracting resignation”?
It is felt that it is illegal.
Has the company included component of Gratuity in CTC sheet issued to employees?
Who is being declared redundant: position/designation of employee or employee?
prabhakar singh
(Expert) 03 April 2013
Unless the employment is protected under labor legislation,employees are fired on by companies under notice terms of appointment.
